USD/JPY falls to 108.46, threatens a break of the 100-hour moving average
Combative words by Trump is weighing on risk a little more on the day as he says that “the problem with China is that they just don’t come through” and that “they always change the deal in the end to their benefit”.
It sounds like he’s also resigned that it will be the same outcome again as trade negotiators meet in Shanghai today and tomorrow.
Not only that, his recent remarks also continue to suggest that he is fine with waiting out striking a compromise with China until after the 2020 elections – if he wins that is – and that bodes ill for markets and the global economy.
The trade deal in the making has been dragged for so long and the lack of positive news can be seen weighing on economies all over the world in recent months as well as the slump in the global manufacturing sector.
It will only be a matter of time before that spills over to the services sector – which tends to lag the trend in manufacturing historically – and we’ll see heightened risks of a recession.
As for now, USD/JPY buyers are fighting to stay above 108.50 and the 100-hour MA (red line). A fall below that would see sellers regain back some near-term control and eye a test of yesterday’s low @ 108.42 and the 200-hour MA (blue line) @ 108.20.